There are several reasons why business professionals will purchase Professional Indemnity cover. This could be to comply with legal, regulatory or trade association requirements, to meet contractual obligations or simply to protect your business from potentially unaffordable claims and reputational damage to your business.
A professional can be defined as any person, company or partnership providing:
- Financial Services/Advice
- Legal Services/Advice
- Consultancy Services/Advice
- Design/Construction Services
- I.T. Services
- Any Professional Trade providing Services/Advice
and it is irrelevant whether professional fees are charged for such services or not. If you have given free advice or provided gratuitous services, then you could still be liable if things go wrong
- Traditional professions e.g., Medical and Legal
- Regulated Financial Services professions such as IFA’s, Mortgage & General Insurance intermediaries.
- Accountants, Bookkeepers, Estate & Letting Agents, Will Writers & Estate Planners
- Architects, Archaeologists, Engineers
- Growing professions’ such as Advertising, Recruitment agencies & IT consultants
- Business Consultants, Lifestyle Coaches, Training & Compliance firms.
- Complimentary Therapists.
- Any individual or organisation providing professional services either on a stand-alone basis or alongside other core services.
It is important to understand that PI Polices will cover you for claims arising from any errors, omissions, or negligence in the work that you have conducted in the past as well as work you will conduct in the future. However, this is always subject to the retroactive date noted on the policy (see note on retroactive dates below) and that there is a PI policy in force at the time the complaint is received by you. In addition, for any notified claim to be ‘eligible’ for cover, insurers must be notified of the claim in accordance with the policy terms and conditions.
Most polices will provide a range of cover options and whilst the following is not an exhaustive list, these covers are typical of most policies:
- Negligence, errors, and omissions in the course of your work
- Dishonesty of Employees
- Libel and Slander
- Infringement of copyright
- Loss of documents
- Unintentional breach of confidentiality
- Court costs
It is important that you purchase the correct levels of cover for your business which, in many cases, is dictated by regulators or by any trade association you belong to. If you are not regulated or a member of an association then you can choose the levels that you can practically afford and/or that will match the income and risk/exposure levels for your business.
A common level of cover purchased is £250,000 any one claim but this may not be an adequate amount for firms with large incomes, high value contracts or those firms in higher risk trades.
- Meet your legal, regulatory or trade body/association requirements.
- Help you comply with any contractual obligations.
- Defend your business against costly claims brought about by allegations of your unprofessional conduct, poor service, negligence, errors and/or omissions (whether such allegations have any substance or not)
- Pay any compensation to your client that is awarded by the arbitrators or the courts, but only up to the level of indemnity you have chosen.
- Pay for any legal costs incurred in defending a claim, even if the claim has no substance.
- Support you with expert legal advice and representation where necessary.
- Help minimise disruption to your business.
- Give confidence to clients that you run your business professionally and that your professional standing and reputation is important to you.